Correlation Between China Resources and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both China Resources and Willamette Valley at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Resources and Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Willamette Valley Vineyards, you can compare the effects of market volatilities on China Resources and Willamette Valley and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Resources with a short position of Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Willamette Valley.
Diversification Opportunities for China Resources and Willamette Valley
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Willamette is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley and China Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Resources Beer are associated (or correlated) with Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of China Resources i.e., China Resources and Willamette Valley go up and down completely randomly.
Pair Corralation between China Resources and Willamette Valley
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Willamette Valley. In addition to that, China Resources is 1.28 times more volatile than Willamette Valley Vineyards. It trades about -0.04 of its total potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.02 per unit of volatility. If you would invest 424.00 in Willamette Valley Vineyards on November 9, 2024 and sell it today you would lose (78.00) from holding Willamette Valley Vineyards or give up 18.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.42% |
| Values | Daily Returns |
China Resources Beer vs. Willamette Valley Vineyards
Performance |
| Timeline |
| China Resources Beer |
| Willamette Valley |
China Resources and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Willamette Valley
The main advantage of trading using opposite China Resources and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Willamette Valley can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Willamette Valley will offset losses from the drop in Willamette Valley's long position.| China Resources vs. Tsingtao Brewery Co | China Resources vs. Budweiser Brewing | China Resources vs. Boston Beer | China Resources vs. Anheuser Busch Inbev |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Brown Forman | Willamette Valley vs. Treasury Wine Estates |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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